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The Mail on Sunday today agreed to pay "substantial" libel damages to a former Bank of Scotland director after it reported claims that he was involved in a massive fraud case and used intimidation to take over a nightclub.

Details have not been revealed, but according to one well-placed source the case is set to cost the Mail on Sunday £750,000 in damages and legal costs for both sides.

The allegations appeared in two articles about Irfan Qadir published in 2011 which were based on privileged material, one story came from a civil court claim form and the other from a report of proceedings in a criminal trial.

In October 2012, in a preliminary pre-trial judgment, Mr Justice Tugendhat held that the paper's privilege defence fell down because the reports were not fair and accurate.

At the time the Mail on Sunday said:"We believe the judgment is both wrong and damaging to the reporting of legal proceedings, and are seeking leave to appeal."

But having been denied permission to appeal over Tugendhat's preliminary judgment, the MoS has decided to not to proceed to trial to defend the allegations.

The first article, headlined “Bank of Scotland director ‘drove us out with dogs’”, which appeared on 8 May 2011, claimed that Qadir had committed perjury and used intimidatory tactics to wrongfully take over a nightclub.

It also alleged that these actions caused the three owners of the nightclub to fear for the safety of themselves and their families.

The article, which was on the Mail Online until 8 September 2011, was based on information from a High Court writ, but wrongly stated that Qadir declined to comment – in fact he was unavailable for comment – and the MoS did not report his later categorical denial.

The second article, which appeared on 19 June 2011, was headlined "Top banker named in mortgage fraud case” and reported allegations made by a defence barrister in a sentencing hearing who said that Qadir was central in a conspriracy to defraud banks of £49m.

However, the judge made clear in the five-month trial that these allegations were “unsupported by evidence” and should not have been made. The paper has now accepted that its report was not fair or accurate.

Making a statement in open court this morning, Chris Hutchings from Hamlins on behalf of Qadir said: "The defendant is here today publicly to apologise to the claimant. It is now no longer pursuing a defence that the allegations in either of the articles are true.

"It has agreed to publish an apology in the Mail on Sunday and its website, and to pay the claimant substantial damages and legal costs. It has given an undertaking in relation to the repetition of the allegations. On this basis the claimant is content to let the matter rest."

Lawyer for Associated Newspapers Mark Dennis said: "My Lord, I confirm what my friend has said. The Defendant offers its apologies to the Claimant for the distress and embarrassment caused."

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